The acquisitive US-based firm, SS&C, has expanded its presence in the wealth management software market with the all-cash acquisition of rival Advent Software. SS&C is splashing out $2.7 billion for Advent ($44.25 per share), which makes this purchase the vendor’s largest to date. The transaction is expected to close in Q2 this year. It comes just a couple of months after another takeover by SS&C, albeit on a much smaller scale, of DST Global Solutions.

Bill Stone, SS&C

Bill Stone, SS&C

In the two weeks preceding the official announcement, there was a spike in trading in Advent’s shares, sparking suggestions that some information of the possibility of the SS&C takeover might have somehow made its way to the market. Reuters reported that trading in Advent’s shares was ‘unusually active over the last two weeks with an average daily volume of over a million shares, nearly three times the average over the past 200 days’. And just a few days before SS&C went on the record regarding the acquisition, Advent’s share price climbed to a record high of $42.85 (28th January), bringing the estimated value of the company to about $2.26 billion.

This acquisition nearly doubles the client base of SS&C. The merger of the two providers will create a giant in the global investment management software space, with over 10,000 customers. ‘There is a tremendous opportunity to cross-sell and upsell,’ stated Bill Stone, SS&C’s chairman and CEO, at a dedicated conference call discussing the acquisition. ‘We get to go deeper and broader with our clients. We feel very comfortable with the suite of products that Advent brings. SS&C [through GlobeOp] is already the largest user of Geneva [Advent’s portfolio management system for alternative investors], and we are familiar with other products as well.’ Around 2400 personnel of SS&C use, develop and manage Geneva (of these, around 1000 are accountants, 300 are in technology, development and infrastructure, and 700 in operations), Stone pointed out.

It is worth noting that Advent has a number of tie-ups with various providers to offer Geneva as part of a larger package. For instance, it has a long-standing partnership with Paladyne (now part of Broadridge), with Geneva integrated as part of Paladyne’s outsourced offering to hedge funds, fund administrators and prime brokers.

Pete Hess, Advent Software

Pete Hess, Advent Software

‘We see so many complementary capabilities in this merger,’ said Pete Hess, CEO of Advent. ‘The SS&C direction of administration and being able to offer technology-driven services on top of the technology by far exceeds anything that we’ve been able to develop here at Advent. And now all our customers will have the benefit of those services.’ For SS&C, Advent opens doors to new areas such as the Registered Investment Advisors (RIAs) space – largely through its Black Diamond platform, which Advent purchased in 2011 for $73 million – and also endowment and pension funds.

Demand for outsourcing is ‘increasing rapidly’, said Stone, and SS&C is well-positioned to provide Advent’s existing client base that currently uses in-house technology, operations and accounting with a fully outsourced model for the middle and back office. ‘We deliver a complete service: people, processes and technology. We have over 3300 people, 14 operating centres, four data centres and $600 million in revenue dedicated to these services.’

This is not the first time SS&C has courted Advent. It approached the company in 2013, as Advent was pondering a sale, but following a strategic review, Advent decided to retain its independence. Stone commented that ‘we got to know each other better since then and we liked each other – this is more true than tongue-in-cheek.’

No products are going to be retired, both parties confirmed. ‘We do not see anything in Advent’s portfolio that we’d want to rationalise,’ Stone stated. Hess added that ‘over the years, we have learnt that killing a product is the last thing you want to do. There is no intention on our part to do so, and there won’t be going forward either.’

The combined R&D budget of the two companies is around $125million. ‘We bring a discipline on technology and service that is unmatched. We will have a prototype on things our customers want before some of our competitors get their committee formed,’ Stone claimed.

By Tanya Andreasyan.

by IBS Intelligence